Efforts by the federal government to end the flare of gas by oil companies operating in the country have received a boost as Total has completed the gas flare-out of the Ofon field on Oil Mining Lease (OML) 102 offshore Nigeria.
Apart from the greenhouse gas emission and attendant environmental hazards associated with gas flaring, Nigeria had lost average revenue of $2.5 billion to flared gas.
With Total’s feat at Ofon, the associated gas of the field is now being compressed, evacuated to shore and monetised via Nigeria Liquefied Natural Gas (LNG) in Bonny Island of Rivers State.
Total Exploration and Production Senior Vice President for Africa, Mr. Guy Maurice, said in a statement yesterday that the flare-out of the Ofon field illustrated the company’s commitment to developing oil and gas resources around its existing hubs in Nigeria.
According to him, “This important milestone of the Phase 2 of the Ofon project was achieved in a context of high levels of local content. The flare-out on Ofon is also significant for Total’s environmental targets, representing a 10 per cent reduction in the group’s E and P flaring. This achievement is a clear demonstration of Total’s commitment to the Global Gas Flaring Reduction Partnership promoted by the World Bank.”
The Ofon field is located 65 kilometres from Nigerian shores in water depths of 40 metres.
The field initially commenced production in 1997 and is currently producing about 25,000 barrels of oil equivalent per day (boe/d).
This flare-out milestone will allow for the gradual increase of production towards the 90,000 boe/d production target through the monetisation of around 100 million cubic feet of gas per day, followed in 2015 by the drilling of additional wells.
The execution of the project also involved significant local content, including the first living quarters platform to be fabricated in Nigeria.
Total E and P Nigeria operates OML 102 with a 40 per cent interest, alongside the Nigerian National Petroleum Corporation (NNPC) 60 per cent.
The company said the new feat by Total was a major boost to the federal government’s three decade-old quest for the elimination of gas flare in Nigeria.
The deadline given by the federal government for the elimination of gas flare had been shifted several times from the January 1, 1984, date provided in the Associated Gas Re-injection Act No. 99 of 1979 Cap. A25, Laws of the Federation of Nigeria, which was later amended to December 31, 2008.
Following the failure of the oil companies to meet previous deadlines, the House of Representatives then perfected the legislative framework that pegged a new deadline at December 31, 2012, but it was not also met.
But the House also imposed stiff penalties against non-compliance.
The earlier penalty fee of N410.00 per standard cubic feet of gas flared was also amended, with all companies prohibited from engaging in gas flaring whether routine or continuous.
“Any company so involved shall be liable to a fine to be determined at the prevailing international gas market price and such fines shall not be counted as part of Production Sharing Contract or Joint Venture obligations. Such fines shall be in addition to the penalty for flare,” the new law stipulated.
However, a company is permitted to continue to flare gas in a particular field or fields if the company pays the sum of $5.00 per 1,000 standard cubic feet of gas flared while a processing fee of $1000 shall be payable for every application for permit to flare gas during pre-commissioning and commissioning operations, equipment maintenance and operation upsets.
“Any company that declares an incorrect gas flared volume shall be liable to pay a penalty fee of $100,000 in addition to the payment of the difference of such declared volumes at the prevailing gas market price. Every emergency gas flared as a result of equipment failure or any other reason thereof, must be reported to the regulating agency within 24 hours, failing, which a fine of $500,000 shall be imposed on the defaulter,” the new law also stated.